Version '0.28.04.4240'. Additionally, a similar situation happens at seemingly random periodically when selecting certain positions. The following is additional data gained after further analysis:
1) The game still runs. The only thing that appears to be affected is the player 3rd person camera (not the in-game camera, though it also fades to black and is unusable). Everything fades to black shortly after attempting the encounter and simply backs out of the encounter. I can still hear the movement of the character and the NPC's around me, I can pause, fast travel, open other menus, switch between equipped items, etc. The screen stays black.
2) The game does not require a FULL reset. I just have to return to the main menu and reload the save file.
3) This *appears* to only affect the smaller characters.